Those on lower earnings, e.g. the second decile (£10,853 according to ONS data) will see their post-tax earnings rise by 4.7%, those in the highest decile will see their post tax earnings rise by just 1.1%. Now some policy wonks on the left complain that middle income earners will see their post tax income rise by some 2% and that this is “a waste of money”. The squeezed middle-classes need some help as well, this is a good thing, not a flaw. The hike shouldn’t be paid for by once again shifting the higher rate threshold either. The coalition parties should stop piling on the pressure on the very demographic that voted them into office to cut taxes…

Ben Gummer’s tax transparency 10 Minute Rule Bill was just passed in the House and will come back for a second reading in March. Chris Bryant stood  up to oppose it on the grounds that “there are better things we could be doing”, and raised various technicalities, but to no avail. It makes you wonder what he doesn’t want the voters to know? The UK is a step closer having an itemised breakdown of how our money is spent. 

The fact that polling shows that 69% of voters support the benefit cap, leaves Guido wondering about the other 31%. If taxpayers knew how much they were personally contributing to these handouts, you would imagine that 31% figure would be a lot lower. Enter backbench Tory MP Ben Gummer, whose plan to print a break down of taxes on a statement sent to every taxpayer, every year, has got a lot of attention this morning. The Sun are liking it and the Telegraph claim:

“If you were to discover, for instance, that £4,000 of the £10,000 you have paid in tax and NICs for the year went on welfare, it might put the argument over capping benefits into a different context.”

A sample PDF of the document is here and apparently the Treasury are listening. There is a 10 Minute Rule Bill issue tomorrow, and Guido is scratching his head to see how the Labour can justifiably oppose the idea. Any additional cost would be minimal given that statements, minus the breakdown, are already sent out. Hard to argue that people should be kept in the dark about their own money…

Regressive taxes aren’t just about forcing up the price of supermarket booze, it was putting up VAT – a mistake that boosted inflation which was already above target and hit consumer spending when it was already weak. Unquestionably that was a regressive tax. Even the usually austerity friendly IMF cautioned against the VAT hike.

The squeezed middle aren’t spared either. Air Passenger Duty means that a family of four flying to America for their annual holiday can pay up to £587 in taxes. The Fawkes family fly back and forth to Ireland regularly spending more on air taxes than on air tickets. UK subjects pay more in air taxes than all the rest of the EU’s citizens – combined. It won’t bother the Chancellor on his £10,000 skiing holiday weeks, but those of us in the private sector, not on benefits, reckon he could do more to cut spending and the tax burden. It is called a growth strategy…

‘I’m sometimes tempted to ask the French if they would like a cheese tax’

Also jumping on the bandwagon is the privately educated son of a wealthy businessman Chuka Umunna, who will be speaking for the opposition today in response to a report published by the dwindling campers. The darling of the new Labour left will be facing some tough questions if he actually goes down to the site. Tax avoidance is the number one issue to this “movement” and Umunna’s Teflon image took a pounding this weekend. He made a name for himself  in February with a punchy attack on Barclay’s Bob Diamond at the Treasury Select Committee on the subject of tax havens, forcing the banking baddie to admit that he didn’t actually know how many offshore subsidiaries his organisation had. However, in that 1% kinda way, Chuka has his own offshore dealings to thank for those sharp suits:

“A Labour frontbencher who has led the attacks on ‘tax avoiders’ in the City is at the centre of controversy after it was revealed his £1 million family home was funded from a tax haven. Land Registry documents reveal the house’s complicated ownership structure. Its purchase was funded by Vona Limited, a company registered in Jersey, and in turn owned by companies run by the RBC Trust Company. RBC, also based on the Channel Island, boasts it is one of the ‘top ten’ largest wealth managers in the world, offering services to ‘high net worth clients’ including ‘planning for and mitigating income, capital gains or inheritance taxes’.  A tax expert said: ‘These trusts can cost thousands to run. I can’t think of any reason to do that other than to reduce a tax bill.’”

One thing Chuka won’t be repeating when he leads the charge for Labour today is an off-the-cuff quote he once gave the Standard: “I’m middle class. My struggle, in some senses, is: what struggle?” Quite…

UPDATE: Does Ed agree with his new friends that poppy sellers are “baby killers”?

Osborne’s offer of credit to thousands of small businesses will make Britain the first conservative-led communist state when the loans are inevitably defaulted and the government ends up owning and running everything.

The Chancellor seems to think the solution to the credit crisis is more debt, even though many businesses are doing the opposite and de-leveraging. Banks make money from lending and they lose money lending to bad credit risks. The government thinks the banks are being too cautious even though the markets think there is serious trouble ahead. Guido thinks the markets have it right.

When challenged to introduce growth-stimulating tax cuts the Chancellor refrains saying that he won’t because he is a “fiscal conservative”. George Osborne presumably would concede that Nigel Lawson was also a fiscal conservative, yet he managed to cut the top marginal tax rate from 60% to 40%. There is nothing fiscally conservative about maintaining a tax rate so perversely high it generates lower revenues by driving high earners out. This isn’t fiscal conservativism, it is political defeatism.

It is even less likely that fiscally conservative Nigel Lawson would countenance Osborne’s proposed socialisation of the corporate credit markets. When the government starts lending money to companies that no one else wants to lend to, you can be sure of one thing, they are going to lose a lot of taxpayers’ money. Billions.

“My instinct is that you should always try to reduce every tax if you can…”

The best policy idea to come out of LibDem conference was Danny Alexander’s call for tax thresholds to be raised to £12,500, effectively taking minimum wage earners out of income tax. Reversing Gordon Brown’s complicated tax – the – poor – and – pay – them – benefits strategy. Brown effectively and deliberately made those in work on low earnings recipients of welfare benefits. Brown wanted everyone to be on state benefits (welfare “universalism”) for purely political reasons so as to maximise buy-in from all classes into the welfare state. Hence the cynical Brown/Balls attachment to child benefit for millionaire mums and winter fuel allowances for Michael Winner.

Raising the tax threshold is simple, has popular appeal and will benefit those on low earnings proportionately more than those on higher earnings. It will take some pressure off the “squeezed middle” and won’t increase the welfare trap. It isn’t a perfect policy, prominent Orange-booker Mark Littlewood, a wonk the Institute for Economic Affairs, is wary that it will result in millions of voters being unaffected by the basic rate of income tax who therefore won’t be incentivised to vote for parties and policies that favour lower taxes. He fears that low-earners will have no reason to buy-in to tax cuts if they are taken out of the income tax bracket entirely.

The organised opposition to this policy however is coming from the left-wing, EU-funded think-tank IPPR. The IPPR was founded and funded by the unions back in the Kinnock era to drag the Labour Party to the centre, in the post New Labour era and under new management it is dragging the Labour Party away from the centre towards the left. IPPR is arguing against raising tax thresholds because it won’t help the poorest who are on benefits and not working. This criticism cuts no ice because tax cuts, by definition, are designed to help taxpayers. IPPR argues that targeting benefits, sprecifically towards childcare, would be more effective and cheaper. It is as if they are speaking a different language, the problem of welfare dependency won’t be solved by paying out more benefits.

Nevertheless Guido wishes IPPR well, their wonkish sophistry may well appeal to Ed Miliband. If in 2015 the coalition parties are standing on a platform of reducing taxes on the working poor with the Labour Party standing on a platform of taxing the poor, Miliband will be on the wrong side of the dividing line. “Vote Labour and tax the poor” is a winning campaign slogan – for the coalition parties.

Of interest to Guido was that he wants the regulator’s remit to cover blogs:

Should the new system embrace new media such as the Huffington Post UK or individual political bloggers such as Guido Fawkes?  My answer is Yes, not simply in the interests of a level playing field but also because the distinction between old and new media are rapidly becoming meaningless in the new digital eco-system.  New media is moving into reporting. Old media is blogging and tweeting, and using social media to promote and distribute news and analysis around the world.

If bloggers don’t cooperate he wants “a statutory levy on advertising revenues for non-participants, with such levies being used to fund the new body”. Good luck with that, because it will require some extra-territorial innovations in international law. It is never going to happen, you’ll have to prise the keyboard out of Guido’s cold dead hands…